Up and downs of the New Economy

A friend of me pointed me to the following article, that appeared in a Italian newspaper. I decided to translate it, as almost nobody is be able to read German:

When Burger & Koler Consulting presented their analysis in September, the gentlemen in the board were shocked: "...extraordinary large fluctuations in the workforce", "shitty communications", "shocking awareness that the developed products could be copied very easily", "way to high salary...". Looking at the balances shows what both advisors found out: Maguma AG is not looking fine. The by Tobias Ratschiller, 23, and Robert Finazzer, 46, as Pentap Technologies founded software-corporation was known as one of the most innovative companies in South Tyrol. An IPO was even planned for 2002.

ff - Sdtiroler Wochenmagazin, Norbert Dall

But an anti-climax occured. Ratschiller, who was international-known as Computer-guru developed a new way to publish websites based on the new scripting language PHP. He was planning to seek for investors who wanted him to join in his project, as first the Lanataller contractor Serafin Underholzner, who invested over 1.6 million euros. Ratschiller hired 18 employees, under them high paid professionals like the American Keith Fredericks, who got a position as CTO. Software developers and web-designers from the USA, Russia and Finland came to Bolzana, and the Bic (Business Innovation Center) quickly became the South Tyrolian version of Silicon Valley. But then came the worldwide New Economy crisis. Ratschiller, following critics, may know about Software Development, but he has overestimated his knowledge of running a business. He flew between Boston, Nowosibirsk (where a dependence was founded) and Munich, and the expenses rose quickly, but the products didn't leave stock. And when the very good producet (the "Maguma PHP 4 Enterprise Edition" Kit for publishing Websites, priced at 2000 euro) finaly hit the market, it got a very good press coverage, but almost no customers. Of the 100 kits which they were planning to sell every month, not even a tenth was sold. On of the reasons of the flop: PHP products can, maybe not as perfect as the Maguma EE, be downloaded from the Internet for free. "Open Source" is the name of the trend: In the New Economy you only buy what is free. The investors' millions were quickly burned, and Pentap, now renamed to Maguma, needed fresh capital. Investors, who hardly know anything about the IT branch invested another 200 thousand euros. Alfred Guariello again manages the investment money while hoping to see the New Economy crisis coming to an end. But the downfall of Bill Gates' children went even faster. By Maguma - extremely high expenses, extremely low gains - was it still ablaze. By the presentation of the company analysis only one option showed up: fire employees, reduce costs, and find more investments in the form of 500.000 euros. Serafin also bailed out. The contractor told ff: "I wont invest a dime anymore in this company. I believed in them, I invested in them, and now it seems that I will never see my money again." Robert Finazzer, Ratschillers partner since the beginning of the adventure bailed out a year ago too.

ff - Sdtiroler Wochenmagazin, Norbert Dall

Anyway, as Alfred Guariello, while he invested less, sees not soo black clouds: "In this branch is it always up or down. I am confdent. The product has been developed, we have important partners like Siemens and Sun. We should keep believing that the market opens up." He still wants to bet at that, just like Ratschiller of course. Presently he is mostly away and he has realized that a it's hard for a "little software company" to keep it's head above the water. Also you must realize that the company started in a very bad market environment: "We started, while it went down worldwide. That's the problem, too bad!". The IPO has been cancelled and seven of the nine desks are empty, the foreign professionals went back, the guys who stayed are anonymously mailing bad words over the internet. We asked Ratschiller how Maguma should go further: "Or new investments are made, or we need to sell the company". Begin November the board will make the decision about the faith of the company of the Southtirolian Bill Gates.

ff - Sdtiroler Wochenmagazin, Norbert Dall

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